· DocumentationThese are the cornerstones for an effectivecompliance program that are hard to test, andunfortunately, they are first tested duringan investigation.

Culture

For the culture
aspect, see my article
in June edition
of Compliance &
Ethics Professional.

Elements of a
compliance culture
could be tested, and
the assessment of
the design may be
comprehensive.

Is this enough to determine that the
implementation of a compliance culture
is effective? Can leaders attest that the
compliance program matches the regulatory
expectation? The checklist will not tell
the story.

Technology and systems

This aspect is even more problematic to test.

Which systems provide adequate
solutions for compliance? There are workflow
systems that support the completion of a
certain process. There are data management
systems that provide management
information. Still, all current systems
provide a partial solution to the needs
of compliance. In order to attest that the
compliance processes—in the example given
above covering anti-money laundering—are
effective, leaders rely on old-fashioned and
partial systems that, in the most optimistic
view, provide a 90% false positive alert for
the TM example.

In many areas in life, the invention of one
domain arrived from other domains. Current
financial technologies (fintech) trends brought
sophisticated technology solutions to new
industries and use cases.

I had the opportunity to review a fewdozen systems in the past 18 months as amentor for start-ups in a fintech hub and as aconsultant. There are some successful systemsthat provide realeffective solutionsto compliance-related challenges.

Testing with the
old-fashioned system,
that all stakeholders
would admit does
not provide the
expected results,
means nothing.

Documentation

Documentation is critical, but the importance
is learned when it is too late. Can an
organization work in “investigation mode”
as a routine? Effective documentation
is a combination of systems, processes,
and culture.

I believe that turning compliance into
a structured process and providing annual
attestation is only halfway. The unfortunate
outcome might be that once attested as
effective leaders, managers would feel it
is time to pull the brakes, focus on budget
perspectives, and find themselves exposed
as before. ✵

2. New York State Department of Financial Services Superintendent’s
Regulations: “Banking Division Transaction Monitoring and
Filtering Program Requirements and Certifications.” Available at
http://on.ny.gov/2xK03da.